Bank financing to the highest level in 6 years

Banks operating in the country provided the highest financing in terms of value and growth rate in the past six years, during the first 10 months of last year, at a value of 184 billion dirhams, of which 133 billion dirhams were for the local market in its various economic sectors, in addition to financing for individuals, both citizens and residents, with a percentage of 72%, while the remaining 28% went to financing non-residents of the country, according to data issued yesterday by the Central Bank.

The data showed that the total credit provided by banks amounted, by the end of last October, to two trillion and 175 billion dirhams, compared to one trillion and 991 billion dirhams, an increase of 184 billion dirhams, equivalent to a growth of 9.2%.

She indicated that the total domestic credit recorded, at the end of the monitoring period, one trillion and 871 billion dirhams, compared to one trillion and 738 billion dirhams at the end of December 2023, an increase of 133 billion dirhams, equivalent to a growth of 7.6%.

Financing granted to the private sector, at the end of last October, recorded one trillion and 347.5 billion dirhams, compared to one trillion and 240 billion dirhams, an increase of 107.5 billion dirhams, equivalent to a growth of 44.8%.

Private sector financing includes financing for the trade and industry sectors, which amounted, at the end of last October, to 867.2 billion dirhams, compared to 822.4 billion dirhams at the end of December 2023, an increase of 44.8 billion dirhams, equivalent to a growth of 5.4%.

Private sector financing also includes individual financing, which recorded, at the end of last October, 480.3 billion dirhams, compared to 417.8 billion dirhams at the end of December 2023, an increase of 62.5 billion dirhams during the first 10 months of last year, which is the highest value of individual financing ever during such a period. This period.

The data revealed that allocations for doubtful debts and “suspended” interest recorded a significant decline for the first time by 6.9%, which is the highest percentage of decline for this item ever during a period of 10 months, which reflects the quality of credit granting and customers’ commitment to paying installments on time, and negates the need to set aside Additional allocations to cover defaults.

By the end of last October, the total allocations for doubtful debts and suspended interest amounted to 96.7 billion dirhams, compared to 103.4 billion dirhams, a decrease of 6.7 billion dirhams, equivalent to a decline of 6.9%.

Also according to the data, the total investments of banks, at the end of last October, amounted to 716.2 billion dirhams, compared to 635.1 billion dirhams at the end of last year, an increase of 81.1 billion dirhams, equivalent to a growth of 12.8% during the first ten months of last year. These investments include debt securities, held-to-maturity bonds, stocks, and other investments.

Banking expert, Ahmed Youssef, said, “Banks have large amounts of liquidity as a result of the increase in deposits, in addition to the established policies allowing financing of non-residents. This indicates the strength of credit departments and the policies of the Central Bank that protect banks’ assets.”

He added, “Some countries require that the person reside in the country to grant funding, but the situation in the Emirates is more developed, as it attracts owners of innovations, ideas, and new projects and funds them, even if they are non-residents.”

He stated that “the strength of the economy locally also contributes to the demand for credit by companies and individuals, so we find a big jump during the first ten months of last year, compared to previous years,” adding: “It is true that since 2022 the economic sectors have begun to recover and return to growth.” “But 2024 was the most dynamic and momentum year at the level of business and jobs.”

Youssef continued: “The decline in debt allocations is a positive sign of the quality of credit granting and the absence of defaults that require taking additional allocations,” pointing out that the credit inquiry system has greatly contributed to reducing the risk of non-payment.